How Reid lost his Internet poker gamble

Senate Majority Leader Harry Reid had promised Nevada’s gambling industry a federal law to legalize Internet poker by the end of 2012, calling it the state’s “most important issue” since the nuclear waste dump at Yucca Mountain was scuttled.

But in the end, Reid rolled snake eyes. And as the 113th Congress gets under way, the odds of legislation passing are even worse.

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Now, questions are mounting over Reid’s handling of the issue, which would legalize Internet poker but bar almost all other online wagering. Why, critics ask, did Reid antagonize Republicans at a critical juncture by attacking the efforts of his Senate colleague Dean Heller to garner GOP support? Why did Reid and former Sen. Jon Kyl (R-Ariz.) draft a measure so certain to anger powerful stakeholders — from lottery directors to Native American tribes to gaming officials — in states other than Nevada?

They say Reid had the best shot ever to have pushed the bill through Congress last year. But he never formally introduced legislation — not because he lacked GOP support, some say, but because he didn’t have enough Democrats with him.

Reid spokeswoman Kristen Orthman insisted the senator will try again this year and said he “has sufficient Democratic support.”

But even Reid’s longtime backer, American Gaming Association CEO Frank Fahrenkopf, is skeptical. “Heller and Kyl went to Republican senators, and most of them agreed something had to be done about the problem, but until we see a bill and look at it, we can’t say for certain we’re going to vote for it,” Fahrenkopf said. “Sen. Reid had the same problem on the Democratic side.”

The problem, as defined by the gaming industry, is that the Department of Justice in December 2011 reinterpreted the Wire Act, concluding it prohibits only betting online on sports.

Soon after, more than a dozen state legislatures began mulling over their versions of legalized Web gambling. Delaware, for instance, will allow the sale of lottery tickets and video versions of various casino table games for residents later this year. An online gambling legalization bill has already passed both houses in New Jersey and awaits Gov. Chris Christie’s signature, although he vetoed the same measure in 2011. Others, such as Illinois, New York, Massachusetts and California are looking into variations.

Most of the large casino companies, represented by the AGA, want Congress to ban betting on games of chance online but leave a carve-out for online poker, which they argue is a game of skill.

Without that, they warn, the nation will see an explosion in online gambling of all sorts, from lotteries to roulette, that would discourage players from visiting brick-and-mortar casinos in Nevada and elsewhere.

Reid tried to move online poker legalization before — it had been all but prohibited by a 2006 law that barred financial institutions from moving funds from American accounts into those of Internet gambling sites. He’d failed to get anywhere until the 2011 DOJ action, which brought staunch gambling opponent Kyl to Reid’s side. Kyl told POLITICO in August that he remained opposed to Web poker but was willing to accept it in a compromise that would prevent all the other forms of gambling.

“One man’s online poker legalization bill is another man’s Internet gambling ban,” Kyl said at the time. “I don’t like this, but I can live with it.”

Yet that comity began to break down in September when Reid returned from August recess to assail Heller, who was appointed to finish the term of disgraced Sen. John Ensign, for not wrangling enough GOP votes to make introducing a poker bill viable.

The move, seen as an effort to make Heller appear ineffectual to constituents in advance of his election matchup for a full term with Reid protégé Rep. Shelley Berkley, instigated an unusual internecine feud between senators of the same state, which prompted Kyl to defend Heller and express ire toward Reid.

“A lot of the things Sen. Reid did I don’t think were done with the singular objective of passing the bill. It was really about getting Shelley elected,” said a key tribal lobbyist who requested anonymity so as to not run afoul of the nation’s most powerful Democratic legislator. “He failed on both fronts.”